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Setting up Shop in Lesotho: How the Chinese Succeeded

April 22, 2013

Chinese traders have become highly successful in Lesotho, a poor country with countless villages scattered across mountainous terrain. How did they manage it?

By Mothusi Turner

Exploring Lesotho’s mountains. Photograph by bittegitte.

Of all the African destinations that Chinese migrants have travelled to since China’s economic and political reforms in the late-1970s, Lesotho is perhaps one of the least obvious.

A tiny landlocked kingdom with a largely impoverished population scattered in often inaccessible villages dotted around a stark mountain landscape, Lesotho appears to have little to offer the prospective Chinese migrant. And yet, this country of just over two million inhabitants boasts a Chinese population of several thousands. This community is overwhelmingly made up of shopkeepers from China’s Fujian province who have established a trading network that extends deep into Lesotho’s mountainous hinterland, selling everything from basic groceries to clothing and manufactured goods.

But as in many other countries across the continent, the presence and success of Chinese traders has been a double-edged sword. Some Basotho hail the availability of cheap goods while others decry the squeezing out of local businesses and accuse the Chinese of shoddy practices. And like many observers, most also wonder how they even managed to become so successful.

Keeping themselves to themselves

Despite the best efforts of the Lesotho government, no-one knows exactly how many Chinese currently live in the country. Official census takers in mountain villages often encounter bolted doors or truckloads of tipped-off Chinese residents speeding down the road in the opposite direction, suggesting many of Chinese who reside in Lesotho do so illegally. Most estimates, however, put the figure of the Chinese population in Lesotho somewhere between four and twenty thousand.

Interestingly, Lesotho’s Chinese migrants also seem to be as wary of their own government as they are of national authorities. Despite their inescapable presence in the country’s retail sector, the Chinese tend to keep themselves to themselves and, despite rumours to the contrary, the Chinese embassy does not typically facilitate the entry of economic migrants to Lesotho.

Instead, it prefers to distance itself from them. When discontent over the presence of foreigners in Lesotho’s retail sector boiled over into xenophobic violence in 1991, for example, the Chinese embassy in the capital Maseru shut its gates in the face of distressed shopkeepers who sought help.

Setting up shop

Rather than being in some way tied to Chinese state assistance to Lesotho then, migrants come to Lesotho under their own steam, lured by rumours of easy profits.

But they do not arrive as hostages to fortune, without a plan and alone. Rather, given that kinship networks are the main pull factor behind Fujianese migration to Lesotho, new arrivals usually have links to one of the local Fujianese business associations before they even land. These commercial networks link Fujianese traders across Lesotho with wholesalers in neighbouring South Africa and suppliers in Mainland China, and help new arrivals in number of ways. The presence of Fujianese merchants in villages that, at first glance, seem too small or remote to support a retail business, is testament to the success these associations have had.

To begin with, these networks direct new migrants towards niches in the market and away from areas already saturated by Fujianese businesses; in this way, they create a centrifugal force, pushing new arrivals into remote corners of the country.

Fujianese commercial associations also give advice and provide start-up loans and insurance for new ventures. In fact, Fujianese traders typically spend their first couple of years in Lesotho paying off debts to these associations and to the migratory agents who facilitated their entry into the country. This is part of the reason Fujianese businesses have a reputation for being open 24 hours a day, seven days a week – their owners must work extremely hard and live very frugally simply in order to pay their initial debts.

Start-up capital, hard work and frugality are central to Chinese traders’ success. Also crucial, however, is the ability of Chinese businesspeople to undercut their local competitors. This is made possible by using local Chinese business associations to buy and ship goods in bulk. This helps lower wholesale costs and, additionally, given that the many of the goods sold by Chinese businesses are non-perishable, they can also be stored on site for long periods of time to save on transport costs.

Anti-Chinese sentiment

All these factors help make the Chinese community in Lesotho commercially successful. However, all is not perfect. Despite – or perhaps because of – their success, strong anti-Chinese sentiment prevails in popular opinion in Lesotho.

Rather than distinguishing between different East Asian groups, local Basotho often designate all Asians as “Chinese”, sometimes rudely calling them “the dog eaters”. Local frustration with the perceived Chinese takeover of the small-scale retail industry in Lesotho frequently manifests itself in stories of Chinese managers abusing local staff or of forbidding their Basotho employees from ever working at the till or handling cash.

Furthermore, Fujianese shopkeepers have been accused of every imaginable malpractice, from removing pieces of chicken from barbecue packs and selling the underweight packs at full price, to vending poisonous baby formula and rotten vegetables, to relabeling and selling goods well beyond their sell-by date. Chinese businesses are accused of operating under fake licences and avoiding tax. Chinese migrants are also believed to eschew the national banking system, preferring instead to keep their earnings under their mattresses or on their person. A combination of xenophobia and opportunism has made East Asians the most frequent victims of violent crime in Lesotho – though since 1991 there has been no popular violence against the immigrant community as a whole.

The prevalence of anti-Chinese rhetoric at all levels in Sesotho society, however, does not change the fact that the Basotho are increasingly reliant on the retail services provided by the immigrant Fujianese population. As one Mosotho told Think Africa Press, “if there was no Chinese in Teyateyaneng, where would I buy?”.

As well as sometimes obscuring the benefits locals gain from cheap Chinese imports, anti-Chinese sentiments also sometimes obscure the realities of Fujianese immigration. While popular belief has it that Chinese immigration to Lesotho is increasing exponentially with the help of the Chinese government, for example, there is evidence to suggest that there are actually more Fujianese leaving the country today than entering.

In fact, as economic prospects in Fujian continue to improve and China transforms itself into a country of net immigration, we can expect to see a shift in Fujianese migratory flows in Africa away from the poorest countries such as Lesotho, and towards wealthier African countries and China itself. Unless the Basotho take advantage of the Fujianese presence in the country and learn from their highly effective business model quickly then, it may be too late, as we can expect Fujianese traders to be replaced by another wave of foreign merchants – if not from China, then from West Africa or elsewhere in the global South.